World Bank chief for Africa supports Koroma’s Agenda for Prosperity

In July last year, president Koroma launched another agenda for Sierra Leone’s development, following a six year implementation of his Agenda for Change, which many critics believe had failed to achieve its central objective – increased employment and prosperity.

With over 70% of the population of six million people living below the poverty line, and unemployment – especially youth unemployment, now affecting over two-thirds of households, the president says that his focus now is to increase wealth creation.

His Agenda for Prosperity launched last year to tackle poverty, does not come cheap, and is heavily reliant on the development of key sectors of the economy that are currently underperforming. He says he needs foreign investors.

Last year, cabinet ministers reported to have signed more than $10 billion worth of MOUs (memorandum of understanding) with the Chinese government. But these are yet to materialise into real investments. Talk of a new Chinese built international airport is now off the agenda, due to cost.

Whilst the trickle of foreign investments into the country’s mining and commercial agriculture have been welcomed, the government needs to understand the enormity of the task ahead, if it is to achieve its Agenda for Prosperity.

The government says that it needs $5.7 billion dollars to implement the measures and actions that could see average daily income rise far above $1 dollar. But there is a massive financing gap to be bridged.

Foreign investors and the international community have promised to contribute $3.7 billion, with the government now looking at other ways to finance the $2 billion projected deficit.

Speaking at the 7th consultative group meeting on Sierra Leone, held in Freetown last week, World Bank Vice President for Africa – Makhtar Diop was less than clear as to whether the World Bank will be picking up the $2 billion shortfall.

Instead, he promised president Koroma the support of the World Bank in “leveraging the $100 million per year in concessional credits and grants that are currently available to Sierra Leone.”

This may not be the kind of promise president Koroma wanted to hear, but perhaps the World Bank chief’s vote of confidence on the current state of the country’s economy and political stability, may well prove vital for the government.

This is what Makhtar Diop told president Koroma, the people of Sierra Leone and the international community in Freetown last week:

“Barely two decades ago, Sierra Leone was embroiled in a conflict of unimaginable proportions. But Sierra Leone chose peace and worked its way out of conflict with the assistance of the international community.

Since the end of the brutal civil war in 2002, Sierra Leone has made tremendous progress towards political stability and economic growth. The country has been on a path of reconciliation, reconstruction, and stabilization.

By achieving a sustained record of reforms, Sierra Leone’s CPIA – the World Bank’s composite rating of various development indicators – has moved up to 3.3 over the last few years.

Based on this metric, Sierra Leone has technically moved beyond the threshold of Fragile and Conflict Affected States (FCS).

However, Sierra Leone remains an active player in the cohort of fragile states, and we congratulate the Government on its role in the G7+ process.

Sierra Leone has moved from conflict to stability, holding three presidential and general elections between 2002 and 2012, including a change in government in one instance.

We cannot underestimate the difficulty of such electoral processes and orderly transitions in government – and for this, we commend you.

By some estimates, the conflict in Sierra Leone carried a price tag of US$15 billion in terms of destruction of property, livelihoods, and precious lives lost.

Recovery and reconstruction, which is well underway, will be costly as well.

Sierra Leone deserves to celebrate its success and reap the benefits of the peace dividend.

Convening the CG here in Freetown is testament to this progress – now we encourage the authorities to apply this same resolve and leadership to address Sierra Leone’s economic challenges.

The Government of Sierra Leone has launched an ambitious Agenda for Prosperity program, with a commendable target of 4.8% GDP growth per year.

While headcount poverty has been reduced from 66% in 2003 to about 52% currently, the challenge ahead is to undertake the necessary measures that will accelerate economic growth and reduce extreme poverty.

Your Excellency, Ladies and Gentlemen, in the past decade, Sierra Leone has made significant progress in maintaining macroeconomic stability.

This fiscal prudence needs to be coupled with reforms of the financial sector, so as to improve access to credit for the private sector.

Recent developments in the global economy, following the financial crisis of 2008-2009, highlight Sierra Leone’s vulnerability to dramatic swings in commodity prices.

You have established budgetary processes, and taken a prudent stance on commodity revenues.

As Sierra Leone seeks to boost economic growth and make it more inclusive, we encourage you to transform the gains from the mining boom into investments in durable, long-term growth of the non-mining sectors.

To do, the composition of public expenditures will need to reflect your country’s challenges.

One key priority is to re-balance the mix of current and capital expenditures – and shifting to a larger share of capital expenditures to help bridge the infrastructure gap in Sierra Leone and boost health and education services.

Just as important as increasing the overall share of capital expenditures will be measures to improve the quality of those expenditures.

Toward this end, institutions and processes will be essential to monitor and manage this spending. As a result, support for institution-building and public expenditure management will be a critical element of the World Bank’s program for Sierra Leone.

Efficient and accountable management of public investment processes will allow your Government to increase overall investment in infrastructure and – equally important – ensure that such investments contribute to inclusive growth.

Through project evaluations, financial management information systems, and public expenditure reviews, we stand ready to help you maximize the quality and effectiveness of government spending.

That said, regardless of how many improved processes are put in place, Sierra Leone will still face a shortfall in the massive resources that are needed for infrastructure and human development.

Hence, it is essential to attract the private sector. The World Bank Group stands ready to help support Sierra Leone to attract private investment, such as the reforms that will yield steady improvements in Sierra Leone’s Doing Business ratings and the contractual arrangements with private investors such as public – private partnership legal frameworks.

Boosting this capacity will allow your government to increase overall investment in critical infrastructure.

To illustrate one of the most pressing needs, with less than 10% penetration in electricity, private sector-led growth in natural resources and agricultural value addition will remain an aspiration, as will hopes of generating employment for the estimated 120,000 young people entering the labour market each year.

The economy remains centred on agriculture, which is the main source of livelihood for Sierra Leone’s 3.1 million poor.

We will support you to move the agriculture sector from subsistence levels to greater productivity and higher value market crops.

Investments in health and education, to spur improvements in child and maternal mortality, and in educational access and outcomes, will allow Sierra Leone to harness the full potential of its human capital.

While the odds confronting Sierra Leone remain high, the country has what it takes – a small population, fertile soils with adequate rainfall and abundant natural resources.

Sierra Leone has enjoyed double-digit growth in recent years, and such growth is projected to remain robust over the next five years. You are building the foundation for a prosperous future.

H.E. President Koroma, I once again congratulate the Government for undertaking these ambitious and transformative programs under the Agenda for Prosperity.

This CG is both timely and opportune. Coming immediately after the International Dialogue for Peace and Development, which was concluded yesterday, Sierra Leone has demonstrated to the world that it has taken difficult decisions to maintain peace and address the drivers of conflict that plagued its past.

Notwithstanding these reforms and initiatives, Sierra Leone still needs the support of the international community.

The World Bank Group stands ready to support the government and the people of Sierra Leone in this transformative agenda.

We will work to bring the collective resources and knowledge of the World Bank Group to further leverage the $100 million per year in concessional credits and grants that are currently available to Sierra Leone.

IFC and MIGA will play an enhanced role to help crowd in the private sector. Just as the people of Sierra Leone counted on the World Bank Group during the difficult years of conflict and instability, we stand ready today to assist the Government to leverage financing from development partners and the private sector.

We extend this call to non-traditional development partners as well: our offices in Freetown and in Washington, DC are open for business and ready to work with you.

The emergence from conflict to stability is significant – it marks an important milestone on the transition to growth and prosperity.

It is my hope that all parties gathered here today will stand up to the challenge and give Sierra Leone the necessary boost, and commitment of resources, to begin this march towards shared growth, poverty reduction, and continued peace.”

WITH CORRUPTION EVERYONE PAYS

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